Shop Direct: Navigating a rapid transition to online-only retail

Andy Wolfe, CIO at the UK mail-order giant, outlines how the company has successfully pivoted away from catalog sales to become a web-shopping powerhouse.

For more than 80 years in UK households, the arrival of the Littlewoods catalog — a mail-order publication of up to 1,200 pages showcasing everything from clothing to electronics — was an eagerly awaited event. But last year, Shop Direct, the owner of Littlewoods and sister brand Very, closed the shutters on its catalog operations for the last time. A final print run of 300,000 copies was sent out in May, down from 25 million at its peak.

Shop Direct’s group CIO Andy Wolfe

This was not a symptom of decline at Shop Direct, rather a culmination of an astonishingly rapid transition and a growing confidence in its future as an online-only retailer. Just three years ago, the home-shopping catalog accounted for 72% of group sales; today, 86% of Shop Direct’s £1.8 billion ($2.6bn) annual sales come through the online channel, with the remaining 14% coming through the group’s customer contact center.

Reflecting on that in the announcement of Shop Direct’s annual results for 2015, CEO Alex Baldock took time to highlight the role technology is playing in the group’s success. Being online-only, he said, demands mobile innovation and increasingly sophisticated personalization to give each individual shopper a unique experience, with new investment in big data starting to pay off.

And he acknowledged that tech innovation would remain a priority. “We’re nowhere near the finished article and we’ve only scratched the surface of the full potential here,” he said. “The competition is ferocious so we must and will continue to invest heavily in our digital future.”

Andy Wolfe, Shop Direct’s group CIO, is spearheading that fast-paced transformation. He joined the company in January 2013, having spent 14 years in the mobile telecoms sector, including two years as O2’s CIO. An additional role also saw him take charge of aligning the company’s online operations with its retail stores, and after that exposure he was hooked on retail.Transformation enablers: Cloud, mobile, big data

One of his first major undertakings at Shop Direct was to improve website availability — and that meant a move to the cloud. In 2012, he says, the customer website’s performance was at acceptable levels for only around 57% of the time. By moving Shop Direct’s Oracle Commerce package to the cloud, he says, target performance levels are now at 100%.

Even then, the elasticity of cloud implementations does much to alleviate the pressure that Shop Direct systems come under, he says. During Black Friday 2015, Shop Direct had 4.2 million website visits with no downtime throughout the entire 24 hours.

Cloud has also enabled him to modernize much of Shop Direct’s back-end infrastructure. “A retailer with over 80 years of history doesn’t come without its legacy challenges,” he points out, so he’s porting traditional on-premise apps to Linux and putting them in the cloud, too, where many of Shop Direct’s test and development environments are also hosted.

But as its CEO suggests, much of the real transformation work is happening in mobile and big data — and much of it around Shop Direct’s six-year-old Very.co.uk brand, which delivered £850 million in sales in the 2015 financial year, up 21%.

Mobile accounted for almost 60% of those sales, reflecting Very’s focus on a younger demographic — and the great digital customer experience they demand. A new mobile version released last year included a ‘Snapstyle’ feature, for example, that enables shoppers to take a photo of a piece of clothing they covet, whether that’s in a magazine or being worn by somebody else, and submit it to Very in order to receive suggestions of similar items that the brand has in stock.

“In an online-only retail environment, competitive advantage is pretty much all down to technology.”

Meanwhile, Wolfe and his team have also been experimenting with new big data approaches in a bid to further refine Shop Direct’s approach to personalization. This, again, is particularly important to Very, which positions itself as ‘the UK’s fastest-growing department store,’ with a huge range of more than 1,100 brands and 70,000 individual products.

Wolfe and his team are planning a ‘data lake,’ again located in the cloud and built on Hortonworks’ Hadoop distribution, with analytic tools from SAS Institute. By using data drawn from the company’s transactional website — such as cookie and clickstream data — they’ve already run a ‘personalized sort order’ trial that serves up the products, colors and brands most relevant to an individual customer, based on their browsing histories.

“So if you’re a customer who seems to like Nike and the color white, and had previously been on the site shopping for sportswear products, these white Nike running shoes might be what you see first, followed by other Nike products and other white running shoes,” he explains. “It’s about helping us to ‘connect the dots’ and hopefully increase conversion rates in the process.”

It’s all about leveraging IT to stay ahead of the pack, he says. “In a competitive space like retail, our role in IT has to be about providing competitive advantage to the business. And now that Shop Direct is online-only, it’s pretty much all down to technology, so there’s a lot of pressure — but it’s good pressure. It’s hugely enjoyable, in fact.”

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